The persistent tension between supporting tourism and addressing the critical need for affordable long-term housing continues to challenge local governments across Grand Traverse, Leelanau, Benzie, and Kalkaska counties. The debate over short-term rental properties, a common feature of our region's economy, highlights competing priorities as communities like Traverse City seek to balance vacation accommodations with the urgent demand for homes for year-round residents.
Traverse City, for instance, has implemented specific regulations detailed in its code of ordinances, including zoning districts, lodging assessments for certain properties, and requirements for licenses and inspections. East Bay Township, which initially allowed short-term rentals without regulation, now mandates annual licenses, a minimum 1,000-foot separation between some neighboring short-term rentals owned by the same person, posted rules, and limits on guests and parking.
Jennifer Rigterink, assistant director of state and federal affairs for the Michigan Municipal League, emphasized that the core of the debate is balancing vacation accommodations for tourists, whose spending strengthens the local economy, with the need for affordable long-term housing, particularly in destination communities like ours. Tom Hickson, executive director of the Michigan Townships Association, echoed this sentiment, stating that how to manage short-term rentals is a frequent issue for townships, and his organization is "very concerned."
Both organizations are closely watching state legislative efforts. Hickson noted past legislation aimed at removing townships' ability to enforce regulations and expressed the association's opposition to such moves. He also highlighted pending legislation that would classify short-term rentals as permitted residential use statewide, thereby restricting local governments' ability to ban them. Hickson stressed the importance of balancing regulation with private property rights, recognizing tourism's significance to townships while advocating for local boards to retain the flexibility to meet their specific community needs. He cited an example from Golden Township on the Lake Michigan shore, where "big city investors come in" to acquire real estate, often with no intention of occupying the properties themselves, thereby diminishing the housing supply.
Tom Kingsford, an East Bay Township resident who rents out one property for vacation use in Traverse City while owning other long-term rentals, characterized existing regulations as "so egregious." He noted that East Bay Township's current rules are, in his view, better than those in nearby Garfield Township and Traverse City, where his long-term properties are located. Kingsford's short-term rental on Spider Lake has historically served as a vacation home, offering guests "a taste of lake life, peace and quiet." Despite a common public perception that short-term rentals lead to "wild parties, noise, strangers coming and going, takes away housing," Kingsford said this has not been his experience, and his neighbors have even welcomed guests.
Conversely, Tom Rasmussen of Traverse City, who hosts an Airbnb in a commercially zoned hotel property, believes regulations are necessary. He stated that his business is affected by the large number of residential Airbnbs Grand Traverse County has permitted. Rasmussen argued that residential properties being used as businesses instead of single-family homes contribute to the high cost of housing in the area, and he believes there is already sufficient hotel-zoned lodging available.
Rigterink from the Municipal League further explained that while large investor firms buying strips of houses for short-term rentals might not always be controversial in more urban areas, cities frequently encounter problems with absentee owners. These owners may not live nearby, even residing in a different state or country, leading to an "out of sight, out of mind" dynamic. Rigterink emphasized the importance of having someone on the ground, within a 45-minute distance, to address any issues that may arise with the property.
The Michigan Municipal League advocates for local governments to retain the ability to balance short-term versus long-term housing needs. While the MML agrees that outright bans on short-term vacation rentals are not the answer, Rigterink highlighted the distinction between a temporary visit and actually living somewhere. She differentiated short-term rentals from temporary housing used by professionals, like healthcare workers, who stay for months and are "actually living there, not just there for a week for vacation." In destination communities that depend on the service sector, she noted, service employees often struggle to find places to live close to their jobs.
To address these complex issues, the Municipal League proposes a short-term rental excise tax, which would have visitors contribute to the costs owners pay as service businesses. The league also supports legislation to create a statewide registry for short-term rentals, where the state would license them. Rigterink reiterated the need for "more guardrails around when there is a problem property," emphasizing that local government bodies must carefully navigate the tightrope of providing short-term rental opportunities while safeguarding their communities' long-term housing needs.
